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Crowdfunding for a Cause: Nonprofits Can Now Hold Fundraisers on Crowdtilt

Published on November 21, 2012by Liz Gannes

Crowdtilt today will start offering tax-deductible donations for nonprofits. The company says it is the first crowdfunding site to fully support charity fundraising.

Here’s how it works: Anyone can already start a Crowdtilt group with a funding goal. Now they can select a 501(c)(3) organization from Crowdtilt’s index to receive that money. If the campaign “tilts” — a.k.a. reaches its goal — that money goes directly to the nonprofit, minus Crowdtilt’s regular 2.5 percent fee.

With the massive amounts of crowdfunding sites launching these days, it’s hard to believe that none of them have gone through the process to facilitate nonprofit donations. What’s particularly notable is that these Crowdtilt donations are tax-deductible, and the company takes a relatively small fee.

For comparison, Crowdtilt co-founder James Beshara pointed out that Kickstarter prohibits charity and cause fundraising, Indiegogo nonprofit donations are not tax-deductible, and Movember takes a 17.7 percent fee.

Supporting nonprofits was a personal mission for Beshara, who had initially envisioned them to be at the center of Crowdtilt. Instead, many users take to the site to raise money to rent a party bus or buy bottle service at a club. That’s fine, but it doesn’t have the same sort of gravitas.

Beshara said he personally spent much of the past three months and more than $20,000 to deal with all the regulatory issues around nonprofits.

Beshara said that 28 percent of Crowdtilt projects are already nonprofit. The site waived all fees for Hurricane Sandy projects, and users raised $180,000 for those campaigns over the past few weeks.

Crowdtilt is an all-or-nothing platform, a la Kickstarter, where groups must reach their goal for it to be funded. The secret sauce is that people who participate become advocates for a project because they want it to go through. Beshara noted that the average Crowdtilt project raises 188 percent of its goal.

Crowdtilt has itself raised $2.1 million in funding from investors including Y Combinator, SV Angel and CrunchFund.